Hyperglycemia frequently continues to worsen even after the diagnosis of overt diabetes. The aim of this study is to evaluate the factors contributing to increasing glucose intolerance after onset of type 2 diabetes in Japanese subjects. Five hundred fifty newly diagnosed type 2 diabetic patients were classified into 3 degrees of hyperglycemia based on plasma glucose levels estimated by 75-g oral glucose tolerance test: diabetes mellitus with isolated fasting hyperglycemia (DM/IFH), DM with isolated postchallenge hyperglycemia (DM/IPH), and DM with fasting and postchallenge hyperglycemia (DM/FPH). In addition, the DM/IFH and DM/IPH groups were subdivided to clarify the determinants of fasting and postchallenge hyperglycemia. Insulin secretion was evaluated by insulinogenic index, and insulin sensitivity was evaluated by composite index of insulin sensitivity (ISI composite). The insulinogenic index in DM/IFH was highest of the 3 groups (P < .0001). The insulinogenic index in DM/IPH was higher than in DM/FPH (P < .0001). The international sensitivity index composite in DM/IPH was highest of the 3 groups (P < .05). Although impaired early-phase insulin secretion plays the crucial role in deterioration from DM/IFH to DM/FPH in Japanese subjects, impaired early-phase insulin secretion and decreased insulin sensitivity both are factors in deterioration from DM/IPH to DM/FPH. In addition, comparison of subgroups of DM/IFH and DM/IPH shows that although decreased early-phase insulin secretion plays the more significant role in postchallenge hyperglycemia in Japanese subjects, insulin sensitivity is the more important factor in fasting hyperglycemia.